Drinks, dinners, differing accounts | The witness | Alice Miles: comment | Peter Riddell: briefing | Rachel Sylvester: analysis | Questions for Mandelson | Sketch | Osborne chronology and Rothschild reply | Rothschild fundraiser on hold | Hellraising for the super-rich | Animal analogies: give us yours

Lord Tebbit pitched himself with characteristic bluntness today into the row over claims that George Osborne solicited a donation from a Russian oligarch, telling the Shadow Chancellor: "If you sleep with dogs, you will get fleas."

The former Conservative chairman spoke out over allegations from the hedge fund manager Nathaniel Rothschild that Mr Osborne had used a holiday in Corfu to solicit a possible donation to Tory coffers from Oleg Deripaska, the billionaire industrialist considered Russia's richest man.

“I find it very hard to believe that he could have been so foolish as to solicit a financial contribution from such a man, knowing that it would risk being an unlawful contribution," Lord Tebbit said.

Yachtgate: where Osborne and Rothschild differ

Five key questions remain unresolved over allegations that Conservatives solicited a donation from Russian billionaire

• A witness with impeccable Wall Street credentials

• Drinks, dinners and differing accounts: a weekend on Corfu

• George Osborne on the rack over new donation allegations

BACKGROUND

• Oleg Deripaska - oligarch at centre of storm

• Hellraising for the rich: how Osborne met Rothschild

• Osborne's chronology and Rothschild's reply

Multimedia

• Osborne and the oligarch

Related Links

• Analysis: Bringing the House down

• Drinks, dinners and differing accounts

• George: you never break the code of silence

Multimedia

• Comment Central - give us your animal analogies

“On the other hand, one has to say that George Osborne should remember that those who sleep with dogs will get fleas.”

Mr Osborne has denied Mr Rothschild's allegation, made in a letter to The Times published yesterday, that he and Andrew Feldman, the Conservative Party chief executive, solicited a donation from Mr Deripaska in various meetings in Corfu this summer.

David Cameron's close political ally yesterday gave a detailed account of his meetings with the oligarch on the Greek island and said: "We didn't ask for any money. We didn't receive any."

But Mr Rothschild, apparently stung by Mr Osborne's earlier indiscretions about a meeting with Peter, now Lord, Mandelson on the same holiday, stood by his claims and last night named a witness to the discussions.

Tory party officials said today that neither Mr Osborne nor Mr Feldman planned to sue over the allegations, to avoid a "messy" court case in the run-up to the next election. "They know politics is a controversial business and they are pretty relaxed about it all," one said.

Yesterday, Mr Rothschild asserted that James Goodwin, one of the guests at his Corfu villa, was present when he, Mr Osborne and Mr Feldman discussed a possible donation by Leyland Daf, controlled by Mr Deripaska.

Mr Rothschild said that the discussion continued once the party arrived on the Queen K, Mr Deripaska’s yacht.

Mr Rothschild issued his statement at 9pm in what appeared to be an escalation of hostilities with his old friend from Oxford. In it, he directly contradicted Mr Osborne’s account that there had been no discussion of channelling donations through a British company.

He went on to say that his witness, Mr Goodwin, recalled that the subject of a donation arose briefly after they went to the Russian’s yacht “but the conversation gained no traction”.

Mr Goodwin is a former adviser to President Clinton and a prospective nonexecutive director of Rusal, Mr Deripaska’s aluminium company, Mr Rothschild added that at dinner later that evening the donation was again talked about “and Mr Osborne was interested in whether and how such a donation could be secured”.

Mr Osborne had said in his statement that “there was no discussion about how a donation by Mr Deripaska could be concealed or channelled” Later, a spokesman said that Mr Osborne denied absolutely “any new recollections from Mr Rothschild”.

In another twist, sources close to Mr Deripaska suggested that discussions about a donation had taken place, but firmly denied that he initiated them.

Even before Mr Rothschild’s statement, the affair had provoked huge embarrassment for the Conservative leadership, with Tory MPs raising questions about Mr Osborne’s judgment in allowing himself to become embroiled in questions about funding.

There was also unease that the leadership had questioned Lord Mandelson’s links with the oligarch while apparently being unaware of the extent of Mr Osborne’s and Mr Feldman’s discussions. But David Cameron told reporters last night: “It was the right judgment not to ask for any money, it was the right judgment for the Conservative Party not to take any money and it was the right judgment today to come out and explain very clearly all the conversations that took place.”

A statement issued on behalf of Mr Osborne and Mr Feldman said that there had been a conversation involving them and Mr Rothschild about the possibility of a donation from Mr Deripaska. It said that the suggestion was made by Mr Rothschild and that it was dismissed by the Conservatives as “inappropriate”.

Sources close to Mr Rothschild said that he felt that Mr Osborne had been guilty of bad manners by allegedly encouraging media reports that embarrassed two of his friends, Mr Deripaska and Lord Mandelson.

But Mr Osborne and Mr Feldman suggested that now that they had provided a full and detailed explanation of their dealings with Mr Deripaska, Lord Mandelson should do the same.

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